HOUSE prices are set to fall much further, a leading property expert has predicted.
Reports last week claimed UK house prices are likely to fall 10 per cent over the next two years.
Credit ratings agency Moody’s also warned high inflation and the recent spike in lending rates “will trigger a correction in the UK housing market”.
Commenting on the current situation with house prices, Jonathan Rolande, from the National Association, predicted prices are going to drop again.
Mr Rolande said: “Aspiring home buyers, landlords and owners are set to be hit with another round of interest rate hikes just as many thought that the worst was behind us.
“Stubborn inflation at nearly nine per cent – a long way from the two per cent target – may lead to a Bank of England rate increase later this month and mortgage lenders have started preparing for it.
“Many mortgage deals have been pulled and replaced with higher-cost offerings.
“A £250,000 mortgage is currently some £400 more expensive than it would have been a year
“Although the headline drop is only around 3 per cent the reality is much worse for sellers. Those that have a pressing reason to sell – divorce, probate, financial problems – may struggle and have to reduce further.”
Mr Rolande continued: “It is difficult to see what might happen to stop the decline of UK house prices. With average prices failing to keep up with general inflation, it can be argued that property has already lost a substantial amount of value. It seems likely that the coming months will see further drops in prices, achieved quite possibly wiping off a few percent or so by the end of the year.
“Moody’s prediction of a 10% drop over two years may well be correct. The worrying thing here isn’t just the fact that homes will be worth less than many have paid, it is also the length of time things are predicted to be difficult.
“Many homeowners are already struggling to meet their commitments each month, often relying on savings to get them through. Once these are depleted, we may well begin to see the spectre of mortgage arrears and repossession once again.”
